41–50 of 140 posts
It is very simple. There are two things happening here. One: the Fed has invested trillions buying everything under the sun (not just t-bills) to prop up the markets and make it look the economy is fine. Two: interest rates are being held artificially low by the Fed and have been for a while. So people are desperate for returns and the only place to get it is equities. It is a pyramid scheme and must pop someday. Rea…
Unprofitable can be good or bad or unknown: Bad: they dont have product market fit and cannot price at a level that is profitable Unknown: they do have product market fit and can likely price at a level that is profitable, but choose to underprice to capture market share and grow Good: They are actually profitable but are re-investing all their profits into internal investment to become even more profitable in the fu…
I said this in another thread, and I think it's apt here. If you have high growth, you can lose a lot of money and still have a good story. If you make some money, but don't have high growth, then you can't tell nearly as compelling of a story. Effectively, investors are assuming eventual profitability is inevitable , and measuring growth. The 90s showed that's fair... sometimes. But definitely lets pathological corp…
It's psychology-fueled. Also, a lot of companies reinvest profit so they don't have to pay taxes.
Don't they use accounting tricks these days so they can keep their cash and then carry it to the stock market? This has the double advantage to keep the stock market inflated and compared to R&D where you risk product failure, the stock market is backstopped by the government and risk-free. That's why we don't have flying cars. Instead of investment in core competencies we invest in the market.
I don’t know much about the stock market outside of throwing any savings I can muster into a vanguard fund, but articles like this remind me of the scene from Silicon Valley where the Pied Piper team is talking about finding a revenue stream. Their investor, the Mark Cuban caricature, Russ Hanneman butts in and yells at them about the dangers of showing revenue and how it proves you might only be a 2x-er. "It's not a…
> Their investor, the Mark Cuban caricature, Russ Hanneman I didn't know that's what they had intended. I never once thought that's what they were going for.
Also I see the stock market as a train that will take me through the dark tunnel of the inflation caused by printing all the recent money.
It's psychology-fueled. Also, a lot of companies reinvest profit so they don't have to pay taxes.
Don't they use accounting tricks these days so they can keep their cash and then carry it to the stock market? This has the double advantage to keep the stock market inflated and compared to R&D where you risk product failure, the stock market is backstopped by the government and risk-free. That's why we don't have flying cars. Instead of investment in core competencies we invest in the market.
The performance of company's stock isn't based solely on whether the company reported a net income it's previous year; it's based on (imo) an ever fluctuating list of metrics, both controlled by the company (i.e. Return on Capital Invested, which net income is a component of) and not controlled by the company (i.e. cost for banks to borrow capital, future growth expectations, current market valuation).
I don’t know much about the stock market outside of throwing any savings I can muster into a vanguard fund, but articles like this remind me of the scene from Silicon Valley where the Pied Piper team is talking about finding a revenue stream. Their investor, the Mark Cuban caricature, Russ Hanneman butts in and yells at them about the dangers of showing revenue and how it proves you might only be a 2x-er. "It's not a…
> Their investor, the Mark Cuban caricature, Russ Hanneman I didn't know that's what they had intended. I never once thought that's what they were going for.